Exam 15: Obtaining Debt Capital

In the case of inventories or equipment,what is the amount that could be realized from an auction or quick sale called?

Owners of creditworthy companies with excellent records for timely repayment of interest and principal do not have to provide personal guarantees.

Commercial finance companies lend against the _____ value of assets.

In tight economies,which of the following is most accepting of risk?

Trade credit is reflected as _____ on a balance sheet.

What is the primary source of debt capital for existing businesses?

Line of credit funds are used for seasonal purposes like inventory buildup and receivable financing,frequently the largest and most financeable items on a venture's balance sheet.

Factoring is accomplished on a _____ value of the receivables pledged.

Which characteristic of leasing is advantageous for high-technology and life sciences companies?

Trade creditors sometimes regard factoring as evidence of a company in financial difficulty.

What are the three distinguishing features of term loans?

Which of the following businesses frequently lend money to companies that do not have positive cash flow?

Unlike equity investors,banks place very little weight on the quality of the management team.

The better the material entrepreneurs can supply to demonstrate their business credibility,the easier and faster it will be to obtain a positive lending decision.

If a loan exceeds the limits of a local bank,part of the loan amount may be offered to _____ banks to diversify the risk profile.

A factor assumes the credit risk,does credit investigations and collections,and advances funds.

Under _____ financing,the bank purchases installment contracts at a discount from their full value and takes as security an assignment of the manufacturer/dealer's interest in the conditional sales contract.

Leasing credit criteria are very similar to the criteria used by commercial banks for equipment loans.

What is the advantage of dealing with a commercial finance company?

For new and young businesses,lenders do not like to see total debt-to-equity ratios greater than _____.